Durban — Gold Circle’s financial crisis could decimate KwaZulu-Natal's horse racing industry if a takeover bid by sports betting operator Hollywoodbets is not approved.
Industry experts say thousands of jobs and at least 100 horse races are on the line should approval not be granted, while eThekwini Municipality also stands to lose millions, if not billions, in revenue.
If Hollywoodbets is successful, it will take over Gold Circle’s racing operations at Greyville in Durban and at Scottsville in Pietermaritzburg.
National Horseracing Authority CEO Vee Moodley said it was common knowledge that Gold Circle was in financial distress and should Hollywoodbets, which had made a joint bid with businessman Greg Bortz, succeed, it would revitalise the industry.
He said South Africa currently had three operators in the horse racing industry: Cape Racing owned by Hollywoodbets and Greg Bortz; 4Racing which bailed out Phumelele when they went into business rescue; and Gold Circle. If the current deal went through, the country would have two operators.
“My understanding was at the time this transaction was taking place, Gold Circle only had money to last about 18 months. That was to about, I think, the end of 2025. In a similar vein, Cape Racing was in financial distress. Hollywoodbets took over and they now own and manage Cape Racing. It’s early days, (but) they have resuscitated the business and they saved jobs,” said Moodley.
Gold Circle declined to comment.
The matter is currently before the Competition Commission. If it gets the green light, the KwaZulu-Natal Gambling Board will have the final say on whether or not Hollywoodbets can acquire Gold Circle. Competition Commission of South Africa spokesperson Siyabulela Makunga said that generally they would consider two things: whether it would have any substantial effect on competition and if there were any issues raised around public interest, employment and participation of historically disadvantaged persons.
“If those issues arise, then the commission would propose remedial measures to address them. Then there will be discussions between us and the parties through their lawyers. We would come to some middle ground ... we would approve it with specific conditions,” said Makunga.
Hollywoodbets already sponsors and has naming rights to a number of events and venues in KZN like Africa’s premier horse racing event, the Hollywoodbets Durban July, the home of rugby and cricket in KZN, Hollywoodbets Kings Park and Hollywoodbets Kingsmead. It also has naming rights at the Greyville and Scottsville racecourses.
Moodley said horse racing was vulnerable because of its business model, which was vastly different to that of other forms of sport.
“The business model of horse racing is highly dependent on wagering. All other forms of sports earn their revenue from media, sponsorships and game ratings, basically intellectual property (IP) rights. Horse racing is different.
“The sponsorship is minimal, media is negligible and IP rights, we have to pay to be on TV. Now when you come to wagering and betting, that has taken a significant drop. As at the end of March 2023, the total gaming revenue in South Africa was R815 billion and horse racing was only R12bn,” said Moodley.
Hollywoodbets consultant Basil Thomas said Gold Circle was in a more precarious position than Cape Racing ever was. Cape Racing had owned immovable assets, whereas Gold Circle rented its property. The ownership of Cape Racing came into effect on December 1, 2023, after Hollywoodbets was initially approached to undertake a “rescue mission” for the organisation when it was just days away from business rescue.
“It has been rejuvenated or resuscitated to a large extent because the facilities, for example, escalators and stabling, had been seriously neglected and in need of being fixed. We’ve spent a lot of money and we are also now obviously funding the operation and it continues to make losses, but we’re trying to bring Cape Racing (on an) even keel with a number of revenue initiatives, particularly that property where we might be able to turn it into more than a race course,” said Thomas.
He said Gold Circle was losing more than R100 million a year.
“It’s projected for their financial year that ends on July 31, their projected losses are R118m. I don’t think they’ll last beyond the end of the year, but to be safe I would say probably by the first quarter 2025 Gold Circle will be insolvent.”
The only way to reduce the losses would be to dramatically reduce the purse sizes in an industry where horse ownership was already a lossmaking business, Thomas said.
“There’s no way of arresting those losses right now without having a serious impact on the whole industry, particularly the horse ownership and breeders and the like because the only effective way you could reduce those losses would be to dramatically reduce the stakes,” he said.
Thomas said “as bizarre as it sounded”, Hollywoodbets only had altruistic reasons for wanting to rescue Gold Circle and take on a loss-making operation. He said horse racing had been a core part of their business since the days when there wasn’t much else to bet on. It was in their DNA and the company felt it was its responsibility to save jobs and keep the industry alive.
“There is (also) some commercial credibility to why we would do this; Gold Circle races 108 times a year and, of course, Hollywoodbets does offer betting on those 108 races. So if Gold Circle was to no longer exist, then there would be 108 events which would not be available for us to offer betting on. Having said that, the loss of that revenue does not exceed the projected cost of operating Gold Circle,” said Thomas.
He said they were prepared to take a chunk of their profitable business and apply it to a non-profitable business to protect jobs and the industry as a whole in terms of breeding, owning and all the related services that go with it.
“We try to be a good corporate citizen and there is nobody else in the queue.”
Thomas said there was nothing unusual in their attempt to save Gold Circle because 4Circle did the same when it took over Phumelele Gaming & Leisure.
“There is nothing to indicate that 4Racing is creating a profit. My understanding is that it’s incurring significant losses. But it is being funded by the Mary Oppenheimer Daughters trust, clearly (by a person) who is very passionate about horse racing and contributed to horse racing. The only way horse racing is going to survive in this country is if there are basically benefactors – not people who want to turn it into a commercial operation.”
Thomas said one of the reasons horse racing had taken a knock was because previously it was the only form of legalised gambling in South Africa, but this was no longer the case.
“It’s now competing with so many other forms of gambling and other forms of entertainment, which are available physically and online and on streaming. People are using their leisure time very differently.”
Sportingbet head of brand Brenton Chelin said horse racing was a key part of the South African betting industry but had been struggling for a number of years. He said Hollywoodbets was the right company to revitalise the industry in KZN.
“Obviously, with them being an operator as well, there is a concern of conflict of interest in the long term, but given what they’ve achieved thus far, I think they will do a good job with KZN racing as they have done with Cape Racing.”
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